• Governor flayed for 5,700 held containers, LC issues
• Jameel Ahmad reiterates country to receive fresh dollar inflows in coming weeks

KARACHI: Traders declared open season on State Bank of Pakistan (SBP) Governor Jameel Ahmad on Wednesday, hurling barbs that sometimes bordered on outright insults for imposing import restrictions.

Members of the Karachi Chamber of Commerce and Industry (KCCI) spared little mercy for the central bank chief in a town-hall meeting for letting 5,700 containers laden with food, medicine and industrial raw materials waste away at port for months on end.

Banks are refusing to open letters of credit (LCs) for a majority of imports under explicit directives from the SBP as the country fights a serious shortage of dollars. Minimising dollar outflows has brought a wide section of import-dependent industrial activity to a standstill across the country.

Based on K-Electric billings, power consumption by Karachi-based factories has gone down by 30-35 per cent in recent months, which reflects declining industrial activity, according to the KCCI leadership.

In a visual demonstration of the closure of industry, one over-enthusiastic KCCI representative handed the SBP governor a giant key in a velvet box. Visibly embarrassed, Mr Ahmad squirmed in his seat and refused to accept it without making eye contact with the KCCI representative.

Similarly, an importer of the perfume used in soap manufacturing told the governor that his promise of better days meant little more than a lollipop. “It’s not an issue of the dollar shortage. The issue is of your intent,” he said, curtly. The businessman said banks aren’t processing his import documents even though his long-time overseas supplier has extended credit for one year. “I don’t need your dollars at all. What’s the hold-up then?”

Another businessman looked the governor in the eye and said he paid a bribe of $2,000 to SBP officials to get clearance for a dollar payment. The SBP has become an “auction house” where importers line the pockets of officials for getting their foreign payments cleared, he alleged. The governor took offence, but the businessman shot back by saying he kept the “proverbial receipts”.

Repeating the views that the SBP governor expressed earlier in the day at the Federation of Pakistan Chambers of Commerce and Industry, he said the country would receive fresh inflows of dollars in the coming weeks and the liquidity situation would improve going forward.

He asked the KCCI leadership to provide the SBP with granular details about the withheld imports and sector-wise values of pending payments. He reiterated the SBP’s official position that LCs of food products, energy-related imports and industrial raw materials will have a higher priority than all other categories.

There’s a total backlog of around 11,000 cases of import payments — down from 33,000 pending cases in 2022 — that the SBP is trying to resolve at the earliest, Mr Ahmad said.

Earlier, KCCI President Mohammad Yousuf Tariq suggested that the SBP do away with the priority list because it leaves room for favouritism and manipulation. LC quotas should rather be assigned based on the preceding year’s turnover, he suggested.

Former KCCI president Zubair Motiwala urged the SBP governor to get all the 5,700 containers released on an urgent basis. He also demanded that the government play its part in getting detention, container and customs charges either waived or reduced. “There’re 75 containers of onions stuck on port. Their demurrage is now higher than the cost,” he said, referring to the penalty imposed on failing to discharge a ship on time.

Speaking to Dawn on the sidelines of the town-hall meeting, an importer of foodstuff said his imports worth $160,000 have been stuck on port since Dec 27, 2022.

“I’m losing money every day as the daily demurrage is $80-100. It’s an incompetent bunch,” he said in an apparent reference to government and central bank officials.

Published in Dawn, January 19th, 2023